Wall St kicks off September under pressure as higher yields, oil prices weigh

By Niket Nishant and Utkarsh Hathi

Sept 1 (Reuters) - The main ‌U.S. stock indexes slipped ​on Tuesday, as ​elevated bond yields and higher oil prices kept investors at bay at the start of a historically weak month for equities.

A sharp increase in rate-hike bets has soured sentiment in recent sessions, while renewed clashes in the Middle ‌East have heightened worries that borrowing costs may need to rise to contain price pressures.

The selloff in ⁠U.S. Treasuries also pushed yields to their highest in months, dampening risk appetite further. Higher yields on risk-free Treasuries typically reduce the appeal of equities.

"It's time to trim ‌the winners and position a little bit ‌more defensively," said Ryan Isherwood, founder and CEO of Significance Capital.

"The rubber band is stretched pretty tight on oil inventories, and it's not going to take a lot to break."

Investors are also contending with seasonal weakness. Since 1926, the benchmark S&P 500 has ​lost 0.7% on average in September, making it the weakest month for stocks and the only one with a negative average return, according to Fisher Investments, which cited data from Finaeon.

Still, historical trends may not be a reason to step away from stocks.

"Historically, ⁠it is when economic conditions were deteriorating that some of these worst outcomes for September and October have played out, which is not necessarily the case this year," said Angelo ​Kourkafas, senior global investment strategist at Edward Jones.

At 11:31 a.m. ET, the Dow Jones Industrial Average fell 215.70 points, or 0.41%, to 52,970.20, and the Nasdaq Composite lost 185.42 points, or 0.70%, to 26,185.47.

The ​S&P 500 was last down 33.19 points, or 0.43%, to 7,652.95 after ‌hitting its lowest in nearly a month earlier in the session.

Wall Street's fear gauge, the CBOE Volatility Index, rose 0.43 points to 15.36.

Six of the 11 main S&P 500 sectors were in negative territory. Consumer ⁠discretionary stocks led losses with a 1.60% fall, while information technology slid 0.78%.

The Philadelphia SE Semiconductor index fell to a near one-month low.

Broadcom was down 0.42% ahead of results on Wednesday. Nvidia, Intel and AMD were down between 0.68% and 2.56%.

JOBS DATA TAKES CENTER STAGE

U.S. job openings rose to 7.27 million ⁠in July, less than the 7.3 million expected, according to economists polled by Reuters. The more crucial nonfarm payrolls data is due on Friday.

While the labor ​market data will be closely watched, some investors believe next week's inflation readings are likely to carry more weight for policymakers after Federal Reserve Chair Kevin Warsh said taming prices is the central bank's chief focus.

"The employment data is not going to be the primary determinant for what happens in September. That's ‌going to be the CPI report next Friday," said Kourkafas.

Data showed activity in the U.S. manufacturing sector accelerated in August, compared with the previous month.

Limiting declines on the S&P 500, energy stocks rose 0.90%, ‌hovering near record highs following a 2.21% gain in Brent crude.

"Of all of the areas of how to play defense, we think energy is the ⁠most effective," Isherwood said.

Declining issues outnumbered advancers by a 1.96-to-1 ‌ratio on the NYSE and by a 2.2-to-1 ​ratio on the Nasdaq.

The S&P 500 posted seven new 52-week highs and 10 new lows, while the Nasdaq Composite recorded 19 new highs and 128 new lows.

(Reporting by Niket Nishant and Utkarsh Hathi in Bengaluru; Editing ‌by Maju Samuel)

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